The social contract, the ‘deal’ that makes us a civilised country, is under grave threat, but we aren’t even talking about it.

Our social contract – the ‘deal’ that makes us a civilised country – is under grave threat both practically and philosophically. And we are not talking about it.

Practically, the UK is in a grave situation. We are in the midst of a serious cost-of-living crisis which will plunge over half of the UK population into fuel poverty next year. This comes on top of 12 years of falling real (inflation-adjusted) wages for the median worker and 12 years of under-funding of services which means that the NHS is now in crisis and people are increasingly falling out of workforce for health-related issues. This further weakens our already fragile economy.

Dissatisfaction runs high: not only are the polls showing clear loss of confidence in the government, but we are also seeing strikes in areas we would not expect – as well as railway workers, barristers, teachers and even nurses have been driven to strike action.

And there is no ‘trade-off’ for all this hardship: the UK has among the worst growth rates of all developed countries.

Perhaps even more worryingly, even the idea of maintaining our social contract is philosophically under attack. The very notion of a society with values, rights and duties is not taken seriously by government. In fact, our Justice Secretary, Dominic Raab, is on record as explaining:

“I don’t support the Human Rights Act and I don’t believe in economic and social rights.

He is not alone: the cabinet is dominated by people who share his market fundamentalist philosophy. While they are savvy enough to talk about ‘levelling-up,’ they take deliberate steps to level down; while they talk of ‘sharing the pain,’ they ensure that does not apply to the wealthiest; while they talk of ‘investing in public services,’ they systematically underfund them.

And they are systematically withdrawing our rights and dismantling our democratic safeguards.

The UK faces serious problems, but we have a government which refuses to accept that serious problems often require systemic solutions: they believe that the responsibility for healthcare can be left with families, tackling poverty can be left to food-banks; and tackling climate change can be left to individuals.

As the evolutionary biologist E O Wilson famously put it:

“Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary.”

The UK is at risk of being forced into becoming a selfish group – and failing as a result.

We need a serious and courageous discussion about what kind of country we want to be, and how we are going to ensure that we become that country.

But first, it is worth recalling the circumstances in which our post-war social contract – the one we are in danger of losing – was created. In the middle of World War II, in 1942, the National Government of Great Britain commissioned Sir William Beveridge, the Director of the London School of Economics, to produce a report on the reconstruction of Britain after the war ended.

Beveridge’s report set out a blueprint for a better, fairer, more prosperous society, which would reward the nation for the shared sacrifices during the war. Specifically, Beveridge aimed to free Britain from what he called Five Giants:

  • Want [poverty],
  • Disease,
  • Ignorance,
  • Squalor and
  • Idleness [unemployment].

The report was published in November 1942 and was overwhelmingly popular with the public. Attlee’s post-war government would have had plenty of excuses for not implementing the report: government debt:GDP stood at over 250% at the end of the Second World War; the cost of servicing that debt was over 5% of GDP; more than half of national income had been diverted to the war effort and over 5 million people mobilised into the Armed Forces; some 5% of national wealth been destroyed, and 1% of the population lost (and the equivalent figures were even worse in some other countries).

This was, of course, a far greater challenge than we face today.

But the national mood was different then. As Margaret McMillan, Professor of International History at Oxford University, explained, “The shared suffering and sacrifice of the war years strengthened the belief in most democracies that governments had an obligation to provide basic care for all citizens.” As Wilson pointed out, that shared suffering and sacrifice may have been necessary to win the war.

And along with a mood of altruism and solidarity, there was one of hope. After six hard years, during the early part of which defeat seemed inevitable, the UK and its allies had emerged victorious. Even more than is usual after a war, the victors felt that good had triumphed over evil. Yes, there was a challenging task of reconstruction – but that was nothing compared with the challenges of the war itself. The national mood then was one of hope and solidarity.

The result was tremendous progress for the UK. In 1948, at a time when the ratio of government debt to GDP was still over 200%, government founded the NHS. Also in 1948, it passed the National Assistance Act, which abolished the poor law system and established a social safety net to protect the poorest and most vulnerable, completing the work of the National Insurance Act of 1946.

The social contract in the UK was transformed. Everyone, whatever their background and current financial state, had access to high-quality healthcare. Everyone had access to a safety net for times when things in their lives went wrong. Everyone played a part in building this new world. And the UK economy benefited hugely: the Golden Age of Capitalism was the most successful period in the UK’s economic history.

If we remember what we achieved in the past, we can create a better future. We need the courage to ask (and answer seriously) some fundamental questions:

  • What is the economy for?
  • What is our government for?
  • What are we, the citizens of the UK, for?

What is the economy for?

We have come to treat ‘the economy’ as something almost God-like: a system with huge impact on our lives but outside our control. An end in itself, to serve which we must adapt ourselves.

But that is a nonsense: the world has over 200 countries – and each has designed a slightly different economic system. Most don’t work very well for their people, but some seem to do extremely well. Ours is not doing well for its people – at least not in comparison with what we used to think of as our peers.

In fact, as the Financial Times pointed out, it is not just those we used to think of as our peers who are doing better for their citizens: the bottom 5% of the population of Slovenia now have higher incomes than the bottom 5% of the population of the UK.

We should ask ourselves: what sort of economy do we want? And if we want one which serves our citizens, we must be prepared to make significant changes.

That brings us on to the second question.

What is our government for?

We tend to assume that governments govern on behalf of their citizens – and many do. But our government is transparently not governing on behalf of the majority of its citizens.

The problems facing the majority of UK citizens were listed above – but since 1980, UK governments have done a good job of looking after the wealthiest.

Indeed, as we discussed last week, for the last 12 years, this government has been systematically transforming our economy into one which works exclusively for the benefit of the wealthiest in society at the expense of everyone else. And it has transformed itself into “a mechanism for redistributing wealth from the ordinary subject citizen to the sovereign individuals.”

If we do not want to see this, we need constitutional reform to redefine the role of government in the national interest.

What are we, the citizens of the UK, for?

We have allowed the traditional idea that human beings have an intrinsic value to be crowded out by the idea that a person’s value is best measured by their market value: how wealthy they are is a measure of their contribution to society. In a market fundamentalist world, we have no rights other than property rights and no duties other than wealth-maximisation.

When we come to look at practical examples, however, this way of valuing humanity seems like nonsense. In the US, for example, an oncology nurse can expect to earn between $74,000 and $118,000. But each of the key executives of the tobacco company Philip Morris is paid more than $5 million. Can we really believe that each one of these executives does more good for society by producing, marketing, and selling (carcinogenic) cigarettes than 50 oncology nurses do by tending those with cancer. In the UK, in 2019, the highest-paid CEO was Denise Coates of Bet365 whose take-home pay amounted to £323 million. In addition, she collected around £46 million in dividends from her 50% share in the company. At a time when problem gambling is growing, it is hard to believe that she brings more value to society than 13,000 nurses.

Indeed, if we imagine a world in which tobacco companies and online betting companies had never existed, most people would think that was a far better world than the one we have today. Surely, their talents and those of their employees would be better deployed, say, tackling climate change? But financially, there is no denying that the owners and managers of these companies are considered ‘high-value’ people.

So, as well as rethinking the role of government, we need to rethink our role as citizens and celebrate those who genuinely contribute to the rest of the population rather than those who merely benefit from it. We need to redefine our values, rights, and duties.

Our discussion is distracted, mis-focussed and myth-based

We are not having this debate: we are distracted by relative non-issues – gossip, celebrities and even chipolatas. Where our media do touch on serious issues, they often misreport them (eg a headline saying “Nurses will walk out of cancer and A&E wards” is misleading – of course they walk in and out every day, but that does not imply that cancer patients will be left unattended in wards without nursing support. And there is no mention of the real-terms pay-cuts that the government has imposed on them over the last 12 years).

Our government, aided by large sections of the media has made huge – and partly successful – efforts to divide the population and blame-shift to distract from its own performance.

And our economic institutions also focus on second-order issues and use a myth-based frame of reference to ‘address’ them. The issues on which they should be focussing are those above: the increasing failure to look after the health and financial well-being of the population.

A truly democratic government would focus on those issues. Ours has chosen to focus on two second-order issues, neither of which it will actually solve: the ratio of government debt to GDP and inflation.

And what public debate we do have about how the UK should address the real issues leaves unquestioned several assertions which are known to be myths:

  • A responsible government could and should behave like a household in managing its spending;
  • Inflation is a measure of our ability to buy and, even when caused by non-domestic pressures, should be tackled by removing money from the UK population through higher interest rates;
  • Markets are the best and fairest way to allocate resources, so the best thing for the government to do is to do nothing and leave every problem to the markets.

We have written at length about why each of these assertions is dangerously untrue (see the links in the bullet points above). Until we in the UK reject these myths, then sadly – even though other countries may be plotting a rosy future for their citizens – there is nothing ours can do. Once we are clear that they are not true, we are free to think seriously about what a responsible government would do.

If you would like to find out more about these issues and how you may be able to help create the debate we need, join the 99% Organisation.